SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the Quarterly Period Ended September 30, 2000
Commission File Number 1-9608
NEWELL RUBBERMAID INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3514169
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
29 East Stephenson Street
Freeport, Illinois 61032-0943
(Address of principal executive offices)
(Zip Code)
(815) 235-4171
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes /x/ No / /
Number of shares of Common Stock outstanding (net of treasury
shares) as of October 25, 2000: 266,578,587
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2000 1999 2000 1999
---- ---- ---- ----
Net sales $1,686,741 $1,609,480 $4,949,100 $4,722,987
Cost of products sold 1,217,988 1,164,910 3,584,387 3,434,303
--------- --------- --------- ---------
GROSS INCOME 468,753 444,570 1,364,713 1,288,684
Selling, general and
administrative expenses 214,509 267,485 675,706 849,978
Restructuring costs 4,243 14,506 12,780 201,227
Goodwill amortization and other 13,378 12,692 39,096 37,355
--------- --------- --------- ---------
OPERATING INCOME 236,623 149,887 637,131 200,124
Nonoperating expenses:
Interest expense 33,184 26,012 95,021 75,713
Other, net 3,440 4,634 10,022 10,922
--------- --------- --------- ---------
Net nonoperating expenses 36,624 30,646 105,043 86,635
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 199,999 119,241 532,088 113,489
Income taxes 77,000 46,504 204,854 89,697
--------- --------- --------- ---------
NET INCOME $ 122,999 $ 72,737 $ 327,234 $ 23,792
========= ========= ========= =========
Earnings per share:
Basic $ 0.46 $ 0.26 $ 1.22 $ 0.08
Diluted 0.46 0.26 1.22 0.08
Dividends per share $ 0.21 $ 0.20 $ 0.63 $ 0.60
Weighted average shares outstanding:
Basic 266,567 281,937 269,056 281,738
Diluted 276,500 292,041 278,987 281,738
See notes to consolidated financial statements.
2
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
September 30, % of December 31, % of
2000 Total 1999 Total
------------- ----- ------------ -----
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 21,439 0.3% $ 102,164 1.5%
Accounts receivable, net 1,236,989 18.2% 1,178,423 17.5%
Inventories, net 1,170,533 17.3% 1,034,794 15.4%
Deferred income taxes 260,914 3.8% 250,587 3.7%
Prepaid expenses and other 164,401 2.4% 172,601 2.6%
--------- ---- --------- ----
TOTAL CURRENT ASSETS 2,854,276 42.0% 2,738,569 40.7%
MARKETABLE EQUITY SECURITIES 6,892 0.1% 10,799 0.2%
OTHER LONG-TERM INVESTMENTS 71,863 1.1% 65,905 1.0%
OTHER ASSETS 308,228 4.5% 335,699 5.0%
PROPERTY, PLANT AND EQUIPMENT, NET 1,573,960 23.2% 1,548,191 23.0%
TRADE NAMES AND GOODWILL 1,973,309 29.1% 2,024,925 30.1%
--------- ---- --------- ----
TOTAL ASSETS $6,788,528 100.0% $6,724,088 100.0%
========== ===== ========== =====
3
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONT.)
(Unaudited, in thousands)
September 30, % of December 31, % of
2000 Total 1999 Total
------------- ----- ------------ -----
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 19,501 0.3% $ 97,291 1.4%
Accounts payable 343,511 5.1% 376,596 5.6%
Accrued compensation 103,236 1.5% 113,373 1.7%
Other accrued liabilities 781,421 11.5% 892,481 13.3%
Income taxes 92,523 1.3% - -
Current portion of long-term debt 100,017 1.5% 150,142 2.2%
--------- ---- --------- ----
TOTAL CURRENT LIABILITIES 1,440,209 21.2% 1,629,883 24.2%
LONG-TERM DEBT 2,064,746 30.4% 1,455,779 21.7%
OTHER NON-CURRENT LIABILITIES 345,477 5.1% 354,107 5.3%
DEFERRED INCOME TAXES 58,877 0.9% 85,655 1.3%
MINORITY INTEREST 1,181 0.0% 1,658 0.0%
COMPANY-OBLIGATED MANDATORILY
REDEEMABLE CONVERTIBLE PREFERRED
SECURITIES OF A SUBSIDIARY TRUST 500,000 7.4% 500,000 7.4%
STOCKHOLDERS' EQUITY
Common stock - authorized shares,
800.0 million at $1 par value; 282,170 4.1% 282,026 4.2%
Outstanding shares:
2000 282.2 million
1999 282.0 million
Treasury stock; (407,458) (6.0%) (2,760) (0.1%)
Outstanding shares:
2000 15.6 million
1999 0.1 million
Additional paid-in capital 214,868 3.2% 213,112 3.2%
Retained earnings 2,492,564 36.7% 2,334,609 34.7%
Accumulated other comprehensive
loss (204,106) (3.0%) (129,981) (1.9%)
--------- ----- --------- -----
TOTAL STOCKHOLDERS' EQUITY 2,378,038 35.0% 2,697,006 40.1%
--------- ---- --------- ----
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $6,788,528 100.0% $6,724,088 100.0%
========== ===== ========= =====
See notes to consolidated financial statements.
4
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
For the Nine Months Ended
September 30,
-------------------------
2000 1999
---- ----
OPERATING ACTIVITIES:
Net income 327,234 23,792
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 221,837 198,202
Deferred income taxes (32,992) 25,061
Net loss on marketable equity securities - 822
Other (6,813) 159,323
Changes in current accounts, excluding the
effects of acquisitions:
Accounts receivable (53,870) (123,436)
Inventories (145,570) (57,339)
Other current assets 1,164 (12,756)
Accounts payable (31,025) 1,416
Accrued liabilities and other 4,873 73,210
--------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 284,838 $ 288,295
--------- ---------
INVESTING ACTIVITIES:
Acquisitions, net $ (70,790) $ (34,907)
Expenditures for property, plant and equipment (240,501) (139,726)
Sale of marketable equity securities - 11,438
Disposals of non-current assets and other 15,504 22,301
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES $ (295,787) $ (140,894)
--------- ---------
5
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)
(Unaudited, in thousands)
For the Nine Months Ended
September 30,
-------------------------
2000 1999
---- ----
FINANCING ACTIVITIES:
Proceeds from issuance of debt $ 831,945 $548,779
Payments on notes payable
and long-term debt (324,939) (603,812)
Proceeds from exercised stock options
and other (147) 26,537
Common stock repurchase (402,962) -
Cash dividends (169,102) (169,437)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES $ (65,205) $(197,933)
--------- ---------
Exchange rate effect on cash (4,571) (2,040)
DECREASE IN CASH AND CASH EQUIVALENTS
$ (80,725) $ (52,572)
Cash and cash equivalents at beginning
of year 102,164 86,554
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 21,439 $ 33,982
========= =========
Supplemental cash flow disclosures -
Cash paid during the period for:
Income taxes $ 121,315 $ 105,995
Interest $ 133,768 $ 100,841
See notes to consolidated financial statements.
6
NEWELL RUBBERMAID INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL INFORMATION
The condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and reflect all
adjustments necessary to present a fair statement of the results for
the periods reported, subject to normal recurring year-end adjust-
ments, none of which is expected to be material. Certain information
and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest Annual
Report on Form 10-K.
NOTE 2 - ACQUISITIONS
The Company acquired Mersch SA ("Mersch") on January 24, 2000 and
Brio on May 24, 2000. Both are manufacturers and suppliers of picture
frames in Europe, and now operate as part of Newell Frames and Albums
Europe.
For these and for other minor acquisitions, the Company paid
$50.8 million in cash and assumed $10.6 million of debt. The
transactions were accounted for as purchases; therefore, results of
operations are included in the accompanying consolidated financial
statements since their respective acquisition dates. The acquisition
costs were allocated on a preliminary basis to the fair market value
of the assets acquired and liabilities assumed and resulted in trade
names and goodwill of approximately $31.2 million.
The Company began to formulate an integration plan for these
acquisitions as of their respective acquisition dates. These plans
may include exit costs for certain plants and product lines and
employee terminations associated with the integrations. The final
adjustments to the purchase price allocations are not expected to be
material to the consolidated financial statements.
The unaudited consolidated results of operations for the nine
months ended September 30, 2000 and 1999 on a pro forma basis, as
though the Mersch and Brio businesses (as well as the 1999 acquisi-
tions of Ateliers 28, Reynolds, McKechnie and Ceanothe) had been
acquired on January 1, 1999, are as follows:
7
Nine Months Ended
September 30,
-----------------
(in millions,
except per share amounts)
2000 1999
---- ----
Net sales $ 4,962.5 $ 5,018.6
Net income $ 327.0 $ 24.0
Basic earnings per share $ 1.22 $ 0.09
NOTE 3 - RESTRUCTURING COSTS
In the first nine months of 2000, the Company recorded a pre-tax
restructuring charge of $12.8 million ($7.9 million after taxes).
This restructuring charge included $5.6 million of facility exit
costs, $4.8 million of severance costs, $1.7 million of costs to exit
contractual commitments and $0.7 million of discontinued product
lines. Most of these restructuring charges were associated with the
integration of the Rubbermaid businesses into Newell.
As of September 30, 2000, $12.6 million of reserves remain.
These reserves consist primarily of $5.5 million for exit costs
associated with the closure of four facilities, $4.7 million in
contractual future maintenance costs on abandoned Rubbermaid computer
software and $2.4 million for exit costs associated with discontinued
product lines at Little Tikes.
NOTE 4 - INVENTORIES
Inventories are stated at the lower of cost or market value. The
components of inventories, net of LIFO reserve, were as follows (in
millions):
September 30, December 31,
2000 1999
------------- ------------
Materials and supplies $ 249.7 $ 240.0
Work in process 179.0 149.5
Finished products 741.8 645.3
--------- ---------
$ 1,170.5 $ 1,034.8
========= =========
8
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in
millions):
September 30, December 31,
2000 1999
------------- ------------
Land $ 58.9 $ 63.4
Buildings and improvements 688.6 691.3
Machinery and equipment 2,265.5 2,200.7
--------- ---------
$ 3,013.0 $ 2,955.4
Allowance for depreciation (1,439.0) (1,407.2)
--------- ---------
$ 1,574.0 $ 1,548.2
========= =========
Replacements and improvements are capitalized. Expenditures for
maintenance and repairs are charged to expense. The components of
depreciation are provided by annual charges to income calculated to
amortize, principally on the straight-line basis, the cost of the
depreciable assets over their depreciable lives. Estimated useful
lives determined by the Company are: buildings and improvements (5-40
years) and machinery and equipment (2-15 years).
NOTE 6 - LONG-TERM DEBT
Long-term debt consisted of the following (in millions):
September 30, December 31,
2000 1999
------------- ------------
Medium-term notes $ 1,109.5 $ 859.5
Commercial paper 1,050.0 718.5
Other long-term debt 5.2 27.9
-------- --------
$ 2,164.7 $ 1,605.9
Current portion (100.0) (150.1)
-------- --------
$ 2,064.7 $ 1,455.8
======== ========
At September 30, 2000, $1,050.0 million (principal amount) of
long-term commercial paper was outstanding. The entire amount is
classified as long-term debt because the amount is backed by a long-
term revolving credit agreement.
9
NOTE 7 - EARNINGS PER SHARE
The earnings per share amounts are computed based on the weighted
average monthly number of shares outstanding during the year. "Basic"
earnings per share is calculated by dividing net income by weighted
average shares outstanding. "Diluted" earnings per share is calculated
by dividing net income by weighted average shares outstanding, including
the assumption of the exercise and/or conversion of all potentially
dilutive securities ("in the money" stock options and company-obligated
mandatorily redeemable convertible preferred securities of a subsidiary
trust). A reconciliation of the difference between basic and diluted
earnings per share for the first nine months of 2000 and 1999 is shown
below (in millions, except per share data):
Convertible
Basic "In the money" Preferred Diluted
Method stock options Securities Method
------ ------------- ------------ -------
Three months ended September 30, 2000:
Net Income $ 123.0 N/A $ 4.1 $ 127.1
Weighted average
shares outstanding 266.6 0.0 9.9 276.5
Earnings per Share $ 0.46 - - $ 0.46
Three months ended September 30, 1999:
Net Income $ 72.7 N/A 4.1 $ 76.8
Weighted average
shares outstanding 281.9 0.2 9.9 292.0
Earnings per Share $ 0.26 - - $ 0.26
Nine months ended September 30, 2000:
Net Income $ 327.2 N/A 12.3 $ 339.5
Weighted average
shares outstanding 269.1 0.0 9.9 279.0
Earnings per Share $ 1.22 - - $ 1.22
Nine months ended September 30, 1999:
Net Income $ 23.8 N/A 0.0 $ 23.8
Weighted average
shares outstanding 281.7 0.0 0.0 281.7
Earnings per Share (A) $ 0.08 - - $ 0.08
(A) Diluted earnings per share for this period excludes the impact
of "in the money" stock options and convertible preferred
securities because they are antidilutive.
10
NOTE 8 - COMPREHENSIVE INCOME (LOSS)
The following tables display Comprehensive Income (Loss) and the
components of Accumulated Other Comprehensive Income (Loss), in
millions:
Nine months ended
September 30,
-----------------
2000 1999
---- ----
Comprehensive Income (Loss):
Net income $ 327.2 $ 23.8
Unrealized gain (loss) on (2.6) 4.5
marketable securities
Foreign currency translation (loss) (71.5) (35.1)
------- ------
Total Comprehensive Income (Loss) $ 253.1 $(6.8)
======= ======
Net Foreign Accumulated
Unrealized Currency Other
Gain/(Loss) Translation Comprehensive
on Securities (Loss) Loss
--------------- ----------- -------------
Accumulated Other
Comprehensive Income (Loss):
Balance at December 31, 1999 $ 0.1 $ (130.1) $ (130.0)
Change during nine months
ended September 30, 2000 (2.6) (71.5) (74.1)
------ -------- --------
Balance at September 30, 2000 $ (2.5) $ (201.6) $ (204.1)
====== ======== ========
11
NOTE 9 - INDUSTRY SEGMENT INFORMATION
The Company's results by business segment were as follows, in
millions:
For the three months For the nine months
ended September 30, ended September 30,
----------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
Net Sales
---------------------------------------
Plastic Storage & Organization $ 433.2 $ 435.9 $ 1,286.6 $ 1,327.9
Home Decor 326.4 327.8 972.1 941.6
Office Products 326.9 309.3 948.0 885.5
Infant/Juvenile Care & Play 221.5 194.4 675.2 609.3
Hardware & Tools 181.1 147.7 535.0 432.7
Food Preparation, Cooking & Serving 197.6 194.4 532.2 526.0
-------- -------- -------- --------
$1,686.7 $1,609.5 $4,949.1 $4,723.0
======== ======== ======== ========
Operating Income
---------------------------------------
Plastic Storage & Organization $ 58.0 $ 33.3 $ 153.6 $ 9.8
Home Decor 43.3 40.0 117.0 118.5
Office Products 62.4 46.7 195.5 158.4
Infant/Juvenile Care & Play 25.3 (0.8) 82.3 24.2
Hardware & Tools 35.1 27.3 87.8 77.6
Food Preparation, Cooking & Serving 35.3 34.8 72.3 70.5
Corporate (18.6) (16.9) (58.6) (57.7)
------ ------ ------ ------
240.8 164.4 649.9 401.3
Restructuring costs (4.2) (14.5) (12.8) (201.2)
------ ------ ------ ------
$236.6 $149.9 $637.1 $200.1
====== ====== ====== ======
September 30, December 31,
2000 1999
------------- ------------
Identifiable Assets
---------------------------------------
Plastic Storage & Organization $1,178.3 $1,155.3
Home Decor 821.4 818.0
Office Products 745.8 720.9
Infant/Juvenile Care & Play 490.1 433.9
Hardware & Tools 368.1 376.5
Food Preparation, Cooking & Serving 567.4 539.8
Corporate 2,617.4 2,679.7
-------- --------
$6,788.5 $6,724.1
======== ========
12
Operating income is net sales less cost of products sold and
selling, general and administrative ("SG&A") expenses, but is not
affected either by nonoperating (income) expenses or by income taxes.
Nonoperating (income) expenses consists principally of net interest
expense. In calculating operating income for individual business
segments, certain headquarter expenses of an operational nature are
allocated to business segments primarily on a net sales basis. Trade
names and goodwill amortization is considered a corporate expense and
not allocated to business segments. All intercompany transactions
have been eliminated and transfers of finished goods between areas are
not significant. Corporate assets primarily include trade names and
goodwill, equity investments and deferred tax assets.
NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS
Since June 1998, the Financial Accounting Standards Board
("FASB") has issued SFAS Nos. 133, 137 and 138 related to "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS No. 133, as
amended" or "Statements"). These Statements establish accounting and
reporting standards requiring that every derivative instrument be
recorded on the balance sheet as either an asset or liability measured
at its fair value. The Statements require that changes in the
derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met, in which case the gains or
losses would offset the related results of the hedged item. The
Company is required to adopt these Statements on January 1, 2001.
While the impact of the adoption of this statement is dependent on the
fair value of our derivatives at the date of adoption, the impact of
adopting SFAS 133, as amended, is not expected to have a material
impact on the consolidated financial statements. However, the
adoption of these Statements could increase volatility in earnings and
other comprehensive income.
13
PART I
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
---------------------
The following table sets forth for the periods indicated items
from the Consolidated Statements of Income as a percentage of net
sales.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of products sold 72.2% 72.4% 72.4% 72.7%
----- ----- ----- -----
GROSS INCOME 27.8% 27.6% 27.6% 27.3%
Selling, general and
administrative expenses 12.7% 16.6% 13.7% 18.0%
Restructuring costs 0.3% 0.9% 0.2% 4.3%
Trade names and goodwill
amortization and other 0.8% 0.8% 0.8% 0.8%
----- ----- ----- -----
OPERATING INCOME 14.0% 9.3% 12.9% 4.2%
----- ----- ----- -----
Nonoperating expenses:
Interest expense 1.9% 1.6% 1.9% 1.6%
Other, net 0.2% 0.3% 0.2% 0.2%
----- ----- ----- -----
Net nonoperating expenses 2.1% 1.9% 2.1% 1.8%
----- ----- ----- -----
INCOME BEFORE
INCOME TAXES 11.9% 7.4% 10.8% 2.4%
Income taxes 4.6% 2.9% 4.2% 1.9%
----- ----- ----- -----
NET INCOME 7.3% 4.5% 6.6% 0.5%
===== ===== ===== =====
See notes to consolidated financial statements.
14
Three Months Ended September 30, 2000 Vs.
Three Months Ended September 30, 1999
----------------------------------------
Net sales for the three months ended September 30, 2000 ("third
quarter") were $1,686.7 million, representing an increase of $77.2
million or 4.8% from $1,609.5 million in the comparable quarter of
1999. The increase in net sales is primarily due to contributions
from Reynolds (acquired in October 1999), McKechnie (acquired in
October 1999), Ceanothe (acquired in December 1999), Mersch (acquired
in January 2000), Brio (acquired in May 2000) and internal sales
growth of 1.9%. The Company defines internal growth as growth from
the core businesses, which include continuing businesses owned more
than two years and minor acquisitions. Sales by business segment for
the third quarter were as follows, in millions:
Percentage
Increase/
2000 1999 Decrease
---- ---- --------
Plastic Storage & Organization $ 433.2 $ 435.9 (0.6)%
Food Preparation, Cooking & Serving 197.6 194.4 1.6%
Infant/Juvenile Care & Play 221.5 194.4 13.9% (1)
Home Decor 326.4 327.8 (0.4)%
Hardware & Tools 181.1 147.7 22.6% (2)
Office Products 326.9 309.3 5.7% (3)
-------- --------
Total $1,686.7 $1,609.5 4.8%
======== ========
(1) Internal growth.
(2) 7.8% internal growth plus sales from the McKechnie
acquisition.
(3) 3.7% internal growth plus sales from the Reynolds acquisition.
Gross income as a percentage of net sales in the third quarter of
2000 was 27.8% or $468.8 million versus 27.6% or $444.6 million in the
comparable quarter of 1999.
Selling, general and administrative expenses ("SG&A") in the
third quarter of 2000 were 12.7% of net sales or $214.5 million versus
16.6% or $267.5 million in the comparable quarter of 1999. Excluding
charges of $47.2 million relating to recent acquisitions, SG&A
expenses in the third quarter of 1999 was $220.3 million or 13.7% of
net sales. Excluding charges, SG&A declined as a result of integration
15
cost savings at Rubbermaid Home Products, Rubbermaid Europe, Little Tikes,
Panex and Rotring, and tight spending control throughout the rest of the
Company's core businesses.
In the third quarter of 2000, the Company recorded a pre-tax
restructuring charge of $4.2 million ($2.6 million after taxes). The
pre-tax charge included $1.5 million of facility exit costs, $1.4
million of severance costs and $1.3 million of costs to exit
contractual commitments and discontinue product lines primarily
related to the Rubbermaid acquisition.
In the third quarter of 1999, the Company recorded a pre-tax
restructuring charge of $14.5 million ($8.9 million after taxes). The
pre-tax charge related to the Rubbermaid acquisition, and included
$1.3 million of merger costs, executive severance costs of $4.5
million and $8.7 million of exit costs primarily related to impaired
Rubbermaid capitalized computer software costs and facility exit
costs.
Trade names and goodwill amortization and other in the third
quarter of 2000 were 0.8% of net sales or $13.4 million versus 0.8% or
$12.7 million in the comparable quarter of 1999.
Operating income in the third quarter of 2000 was 14.0% of net
sales or $236.6 million versus operating income of 9.3% or $149.9
million in the comparable quarter of 1999. Excluding restructuring
costs and other charges in 1999 and 2000, operating income in the
third quarter of 2000 was 14.3% or $240.9 million versus 14.6% or
$234.8 million in the third quarter of 1999. The increase in
operating income was primarily due to $39.3 million of cost savings
and synergies achieved as a result of the Rubbermaid merger. These
gains were partially offset by $34.6 million of increased raw
materials costs.
Net nonoperating expenses in the third quarter of 2000 were 2.1%
of net sales or $36.6 million versus net nonoperating income of 1.9%
or $30.6 million in the comparable quarter of 1999. The increase in
net non-operating expenses is primarily due to $7.2 million of increased
interest expense as a result of higher debt levels and interest rates.
The effective tax rate was 38.5% in the third quarter of 2000 versus
39.0% in the third quarter of 1999.
Net income for the third quarter of 2000 was $123.0 million,
compared to net income of $72.7 million in the third quarter of 1999.
Diluted earnings per share were $0.46 in the third quarter of 2000
compared to $0.26 in the third quarter of 1999. Excluding 2000
restructuring costs of $4.2 million ($2.6 million after taxes), 1999
restructuring costs of $14.5 million ($8.9 million after taxes), and
other 1999 pre-tax charges of $70.4 million ($42.9 million after
taxes), net income increased $1.0 million or 0.8% to $125.6 million in
the third quarter of 2000 from $124.5 million in 1999. Diluted earnings
16
per share, calculated on the same basis, increased 6.8% to $0.47 in the
third quarter of 2000 from $0.44 in the third quarter of 1999. The increase
in net income was primarily due to Rubbermaid integration cost savings.
These gains were partially offset by increased raw materials costs. The
increase in earings per share was primarily due to Rubbermaid integration
cost savings and the impact of the stock repurchase, partially offet by
increased raw materials costs.
Nine Months Ended September 30, 2000 Vs.
Nine Months Ended September 30, 1999
----------------------------------------
Net sales for the first nine months of 2000 were $4,949.1
million, representing an increase of $226.1 million or 4.8% from
$4,723.0 million in the comparable period of 1999. The increase in
net sales was primarily attributable to contributions from Reynolds
(acquired in October 1999), McKechnie (acquired in October 1999),
Ceanothe (acquired in December 1999), Mersch (acquired in January
2000), and 1.6% internal growth. Net sales for each of the Company's
segments (and the primary reasons for the increase or decrease were as
follows in millions:
Percentage
Increase/
2000 1999 Decrease
---- ---- --------
Plastic Storage & Organization $1,286.6 $1,327.9 (3.1) %
Food Preparation, Cooking & Serving 532.2 526.0 (1.1) %
Infant/Juvenile Care & Play 675.2 609.3 10.8 (1)%
Home Decor 972.1 941.6 3.2 %
Hardware & Tools 535.0 432.7 23.6 (2)%
Office Products 948.0 885.5 7.1 (3)%
-------- -------
Total $4,949.1 $4,723.0 4.8%
======== ========
(1) Internal growth.
(2) 6.6% internal growth plus sales from the McKechnie
acquisition.
(3) 5.2% internal growth plus sales from the Reynolds acquisition.
Gross income as a percentage of net sales in the first nine
months of 2000 was 27.6% or $1,364.7 million versus 27.3% or $1,288.7
million in the comparable period of 1999. Excluding charges of $3.1
million relating to recent acquisitions, gross income in the first
17
nine months of 2000 was $1,367.8 million or 27.6% of net sales.
Excluding 1999 charges of $61.6 million relating to the Rubbermaid
merger, gross income for the nine months ended September 30, 1999 was
$1,350.3 million or 28.6% of net sales. The increase in gross income
was primarily due to internal growth and cost savings related to recent
acquisitions, offset by increased raw materials costs.
Selling, general and administrative expenses ("SG&A") in the
first nine months of 2000 were 13.7% of net sales or $675.7 million
versus 18.0% or $850.0 million in the comparable period of 1999.
Excluding charges of $5.9 million relating to recent acquisitions,
SG&A in the first nine months of 2000 was $669.8 million or 13.5% of
net sales. Excluding 1999 charges of $136.2 million relating to the
Rubbermaid merger, SG&A for the nine months ended September 30, 1999
were $713.8 million or 15.1% of net sales. SG&A declined as a result
of integration cost savings at Rubbermaid Home Products, Rubbermaid
Europe, Little Tikes, Panex and Rotring, and tight spending control
throughout the rest of the Company's core businesses.
In the first nine months of 2000, the Company recorded a pre-tax
restructuring charge of $12.8 million ($7.9 million after taxes). The
pre-tax charge included $5.6 million of facility exit costs, $4.8
million of severance costs and $2.4 million of costs to exit
contractual commitments and discontinue product lines primarily
related to the Rubbermaid acquisition.
In the first nine months of 1999, the Company recorded a pre-tax
restructuring charge of $201.2 million ($168.1 million after taxes).
The pre-tax charge related to the Rubbermaid acquisition, and included
$38.2 million of merger costs (investment banking, legal and
accounting fees), executive severance costs of $89.4 million and $73.6
million of exit costs primarily related to impaired Rubbermaid
capitalized computer software costs and facility exit costs.
Trade names and goodwill amortization and other in the first nine
months of 2000 were 0.8% of net sales or $39.1 million versus 0.8% or
$37.4. million in the first nine months of 1999.
Operating income in the first nine months of 2000 was 12.9% of
net sales or $637.1 million versus 4.2% or $200.1 million in the
comparable period of 1999. Excluding restructuring costs and other
charges in 1999 and 2000, operating income in the first nine months of
2000 was 13.3% or $658.9 million versus 12.7% or $599.1 million in the
first nine months of 1999. The increase in operating margins excluding
charges was primarily due to $123.1 million of cost savings and synergies
achieved as a result of the Rubbermaid merger during the nine months ended
September 30, 2000 and internal growth. These savings were partially offset
by increased raw materials costs of $97.6 million.
Net nonoperating expenses in the first nine months of 2000 were
2.1% of net sales or $105.0 million versus 1.8% of net sales or $86.6
million in the comparable period of 1999. Net nonoperating expenses
18
increased due to $19.3 million higher interest expense as a result of the
Company's increased level of debt and higher interest rates.
Excluding restructuring costs and other gains and charges in 2000
and 1999, the effective tax rate was 38.5% in the first nine months of
2000 versus 39.0% in the first nine months of 1999.
Net income for the first nine months of 2000 was $327.2 million,
compared to $23.8 million in the first nine months of 1999. Diluted
earnings per share were $1.22 in the first nine months of 2000
compared to $0.08 in the first nine months of 1999. Excluding 2000
restructuring costs of $12.8 million ($7.9 million after taxes), other
2000 pre-tax charges of $9.0 million ($5.5 million after taxes), 1999
restructuring costs of $201.2 million ($168.1 million after taxes),
and other 1999 pre-tax charges of $197.8 million ($120.7 million after
taxes), net income increased $28.0 million or 8.9% to $340.6 million
the first nine months of 2000 versus $312.6 million in 1999. Diluted
earnings per share, calculated on the same basis, increased 14.4% to
$1.27 in the first nine months of 2000 versus $1.11 in the first nine
months of 1999. The increase in net income for the nine months ended
September 30, 2000 was primarily due to Rubbermaid integration cost
savings, tight spending control at our core businesses and internal
growth. These gains were partially offset by increased raw materials
costs. The increase in earnings per share was primarily due to
Rubbermaid integration cost savings, tight spending control, internal
growth and the impact of the stock repurchase, partially offset by
increased raw materials costs.
Liquidity and Capital Resources
-------------------------------
Sources:
The Company's primary sources of liquidity and capital resources
include cash provided from operations and use of available borrowing
facilities.
Cash provided from operating activities in the first nine months
ended September 30, 2000 was $284.8 million compared to $ 288.3
million for the comparable period of 1999. The decrease in operating
cash flows is primarily a result of increased inventory levels
partially offset by the increase in net income.
The Company has short-term foreign and domestic uncommitted lines
of credit with various banks which are available for short-term
financing. Borrowings under the Company's uncommitted lines of credit
are subject to discretion of the Lender. The Company's uncommitted
lines of credit do not have a material impact on the Company's
liquidity. Borrowings under the Company's uncommitted lines of credit
at September 30, 2000 totaled $19.5 million.
During 1997, the Company amended its revolving credit agreement
to increase the aggregate borrowing limit to $1.3 billion, at a
19
floating interest rate. The revolving credit agreement will terminate
in August 2002. At September 30, 2000, there were no borrowings under
the revolving credit agreement.
In lieu of borrowings under the Company's revolving credit
agreement, the Company may issue up to $1.3 billion of commercial
paper. The Company's revolving credit agreement provides the
committed backup liquidity required to issue commercial paper.
Accordingly, commercial paper may only be issued up to the amount
available for borrowing under the Company's revolving credit
agreement. At September 30, 2000, $1,050.0 million (principal amount)
of commercial paper was outstanding. The entire amount is classified
as long-term debt.
On March 24, 2000, the Company issued $300.0 million (principal
amount) of 3-Year Medium Term Notes pursuant to its universal shelf
program. The securities mature on March 24, 2003, and bear a 3-month
floating interest rate based on 3-month LIBOR +22 basis points. The
initial interest rate was 6.5%. Proceeds were used to pay down
commercial paper. Including this financing, the Company had
outstanding at September 30, 2000, a total of $1,109.5 million
(principal amount) of Medium Term Notes. The maturities on these
notes range from 3 to 30 years at an average interest rate of 6.45%.
A universal shelf registration statement became effective in July
1999. As of September 30, 2000, $449.5 million of Company debt and
equity securities may be issued under the shelf.
Uses:
The Company's primary uses of liquidity and capital resources
include acquisitions, dividend payments and capital expenditures.
Cash used in acquiring businesses was $70.8 million and $34.9
million in the first nine months of 2000 and 1999, respectively. In
the first nine months of 2000, the Company acquired Mersch and Brio
and made other minor acquisitions for cash purchase prices totaling
$50.8 million. In the first nine months of 1999, the Company acquired
Ateliers 28 for a cash purchase price of $40.3 million. All of these
acquisitions were accounted for as purchases and were paid for with
proceeds obtained from the issuance of commercial paper.
Cash used for restructuring activities was $15.4 million and
$127.6 million in the first nine months of 2000 and 1999,
respectively. Such cash payments represent primarily employee
termination benefits and other merger expenses.
Capital expenditures were $240.5 million and $139.7 million in the
first nine months of 2000 and 1999, respectively. The increase in capital
expenditures is primarily a result of increased capital spending at those
divisions acquired as part of the Rubbermaid merger.
20
Aggregate dividends paid during the first nine months of 2000 and
1999 were $169.1 million ($0.63 per share) and $169.4 million ($0.60
per share), respectively.
During the first nine months of 2000, the Company repurchased
15.5 million shares of its common stock at an average price of $26 per
share, for a total cash price of $403.0 million under the company's
stock repurchase program. As of September 30, 2000, the company can
use up to an additional $97 million to repurchase shares under the plan.
Retained earnings increased in the first nine months of 2000 by
$158.0 million. Retained earnings decreased in the first nine months
of 1999 by $145.6 million. The difference between 1999 and 2000 was
due to improved operating results in 2000 versus 1999 and restructuring
costs in 1999 of $201.2 million ($168.1 million after taxes) and
other pre-tax charges of $197.8 million ($120.7 million after taxes).
Working capital at September 30, 2000 was $1,414.1 million
compared to $1,108.7 million at December 31, 1999. The current ratio
at September 30, 2000 was 1.98:1 compared to 1.68:1 at December 31,
1999.
Total debt to total capitalization (total debt is net of cash and
cash equivalents, and total capitalization includes total debt,
convertible preferred securities and stockholders equity) was .43:1 at
September 30, 2000 and .33:1 at December 31, 1999.
The Company believes that cash provided from operations and
available borrowing facilities will continue to provide adequate
support for the cash needs of existing businesses; however, certain
events, such as significant acquisitions, could require additional
external financing.
Market Risk
-----------
The Company's market risk is impacted by changes in interest
rates, foreign currency exchange rates, and certain commodity prices.
Pursuant to the Company's policies, natural hedging techniques and
derivative financial instruments may be utilized to reduce the impact
of adverse changes in market prices. The Company does not hold or
issue derivative instruments for trading purposes, and has no material
sensitivity to changes in market rates and prices on its derivative
financial instrument positions.
The Company's primary market risk is interest rate exposure,
primarily in the United States. The Company manages interest rate
exposure through its conservative debt ratio target and its mix of
fixed and floating rate debt. Interest rate exposure was reduced
significantly in 1997 from the issuance of $500 million 5.25%
Company-Obligated Mandatorily Redeemable Convertible Preferred
Securities of a Subsidiary Trust, the proceeds of which reduced
commercial paper. Interest rate swaps may be used to adjust interest
rate exposures when appropriate based on market conditions, and, for
21
qualifying hedges, the interest differential of swaps is included in
interest expense.
The Company's foreign exchange risk management policy emphasizes
hedging anticipated intercompany and third-party commercial
transaction exposures of one year duration or less. The Company
focuses on natural hedging techniques of the following form: 1)
offsetting or netting of like foreign currency flows, 2) structuring
foreign subsidiary balance sheets with appropriate levels of debt to
reduce subsidiary net investments and subsidiary cash flows subject to
conversion risk, 3) converting excess foreign currency deposits into
U.S. dollars or the relevant functional currency and 4) avoidance of
risk by denominating contracts in the appropriate functional currency.
In addition, the Company utilizes forward contracts and purchased
options to hedge commercial and intercompany transactions. Gains and
losses related to qualifying hedges of commercial transactions are
deferred and included in the basis of the underlying transactions.
Derivatives used to hedge intercompany transactions are marked to
market with the corresponding gains or losses included in the
consolidated statements of income.
Due to the diversity of its product lines, the Company does not
have material sensitivity to any one commodity. The Company manages
commodity price exposures primarily through the duration and terms of
its vendor contracts.
The amounts shown below represent the estimated potential
economic loss that the Company could incur from adverse changes in
either interest rates or foreign exchange rates using the
value-at-risk estimation model. The value-at-risk model uses
historical foreign exchange rates and interest rates to estimate the
volatility and correlation of these rates in future periods. It
estimates a loss in fair market value using statistical modeling
techniques and including substantially all market risk exposures
(specifically excluding equity-method investments). The fair value
losses shown in the table below have no impact on results of
operations or financial condition as they represent economic not
financial losses.
September 30, Time Confidence
2000 Period Level
------------- ------ ---------
(In millions)
Interest rates $4.7 1 day 95%
Foreign exchange $4.5 1 day 95%
The 95% confidence interval signifies the Company's degree of
confidence that actual losses would not exceed the estimated losses
shown above. The amounts shown here disregard the possibility that
22
interest rates and foreign currency exchange rates could move in the
Company's favor. The value-at-risk model assumes that all movements
in these rates will be adverse. Actual experience has shown that
gains and losses tend to offset each other over time, and it is highly
unlikely that the Company could experience losses such as these over
an extended period of time. These amounts should not be considered
projections of future losses, since actual results may differ
significantly depending upon activity in the global financial
markets.
EURO CURRENCY CONVERSION
On January 1, 1999, the "Euro" became the common legal currency
for 11 of the 15 member countries of the European Union. On that
date, the participating countries fixed conversion rates between their
existing sovereign currencies ("legacy currencies") and the Euro. On
January 4, 1999, the Euro began trading on currency exchanges and
became available for non-cash transactions, if the parties elect to
use it. The legacy currencies will remain legal tender through
December 31, 2001. Beginning January 1, 2002, participating countries
will introduce Euro-denominated bills and coins, and effective July 1,
2002, legacy currencies will no longer be legal tender.
After the dual currency phase, all businesses in participating
countries must conduct all transactions in the Euro and must convert
their financial records and reports to be Euro-based. The Company has
commenced an internal analysis of the Euro conversion process to
prepare its information technology systems for the conversion and
analyze related risks and issues, such as the benefit of the decreased
exchange rate risk in cross-border transactions involving
participating countries and the impact of increased price transparency
on cross-border competition in these countries.
The Company believes that the Euro conversion process will not
have a material impact on the Company's businesses or financial
condition on a consolidated basis.
FORWARD LOOKING STATEMENTS
Forward-looking statements in this Report are made in reliance
upon the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements may relate to, but
are not limited to, such matters as sales, income, earnings per share,
return on equity, capital expenditures, dividends, capital structure,
free cash flow, debt to capitalization ratios, interest rates,
internal growth rates, Euro conversion plans and related risks,
pending legal proceeding and claims (including environmental matters),
future economic performance, operating income improvements, synergies,
management's plans, goals and objectives for future operations and
growth or the assumptions relating to any of the forward-looking
information. The Company cautions that forward-looking statements are
not guarantees since there are inherent difficulties in predicting
future results, and that actual results could differ materially from
those expressed or implied in the forward-looking statements. Factors
that could cause actual results to differ include, but are not limited
to, those matters set forth in the Company's Annual Report on Form
10-K, the documents incorporated by reference therein and in Exhibit
99 in thereto.
23
PART I.
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by
reference to the section entitled "Market Risk" in the Company's
Management's Discussion and Analysis of Results of Operations and
Financial Condition (Part I, Item 2).
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is subject to certain legal proceedings and claims,
including the environmental matters described below, that have arisen
in the ordinary conduct of its business or have been assumed by the
Company when it purchased certain businesses.
As of September 30, 2000, the Company was involved in various
matters concerning federal and state environmental laws and
regulations, including matters in which the Company has been
identified by the U.S. Environmental Protection Agency and certain
state environmental agencies as a potentially responsible party
("PRP") at contaminated sites under the Federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") and
equivalent state laws.
In assessing its environmental response costs, the Company has
considered several factors, including: the extent of the Company's
volumetric contribution at each site relative to that of other PRPs;
the kind of waste; the terms of existing cost sharing and other
applicable agreements; the financial ability of other PRPs to share in
the payment of requisite costs; the Company's prior experience with
similar sites; environmental studies and cost estimates available to
the Company; the effects of inflation on cost estimates; and the
extent to which the Company's and other parties' status as PRPs is
disputed.
Based on information available to it, the Company's estimate of
environmental response costs associated with these matters as of
September 30, 2000 ranged between $18.0 million and $26.0 million. As
of September 30, 2000, the Company had a reserve equal to $25 million
for such environmental response costs in the aggregate. No insurance
recovery was taken into account in determining the Company's cost
estimates or reserve, nor do the Company's cost estimates or reserve
reflect any discounting for present value purposes, except with
respect to two long term (30 years) operation and maintenance CERCLA
matters which are estimated at present value.
24
Because of the uncertainties associated with environmental
investigations and response activities, the possibility that the
Company could be identified as a PRP at sites identified in the future
that require the incurrence of environmental response costs and the
possibility of additional sites as a result of businesses acquired,
actual costs to be incurred by the Company may vary from the Company's
estimates.
Subject to difficulties in estimating future environmental
response costs, the Company does not expect that any amount it may
have to pay in connection with environmental matters in excess of
amounts reserved will have a material adverse effect on its
consolidated financial statements.
The Company is involved in a legal proceeding relating to the
importation and distribution of vinyl mini-blinds made with plastic
containing lead stabilizers. In 1996, the Consumer Product Safety
Commission found that such stabilizers deteriorate over time from
exposure to sunlight and heat, causing lead dust to form on mini-blind
surfaces and presenting a health risk to children under six years of
age. In December 1998, 13 companies, including a subsidiary of the
Company, were named as defendants in a case involving the importation
and distribution of vinyl mini-blinds containing lead. The case,
filed as a Massachusetts class action in the Superior Court, alleges
misrepresentation, breaches of express and implied warranties,
negligence, loss of consortium and violation of Massachusetts consumer
protection laws. The plaintiffs seek injunctive relief, unspecified
damages, compensatory damages for personal injury and court costs.
Eight complaints were filed against the Company and certain of
its officers and directors in the U.S. District Court for the Northern
District of Illinois on behalf of a purported class consisting of
persons who purchased common stock of the Company, Newell Co. or
Rubbermaid Incorporated during the period from October 21, 1998
through September 3, 1999 or exchanged shares of Rubbermaid common
stock for the Company's common stock as part of the Newell Rubbermaid
merger. The complaints alleged that during the relevant time period
the defendants violated the federal securities laws by issuing false
and misleading statements concerning the Company's financial condition
and results of operations. The cases were consolidated before a
single judge of that court. The court appointed lead plaintiffs for
the uncertified class and approved counsel for the lead plaintiffs.
Plaintiffs then filed a Consolidated Amended Class Action Complaint
consisting of six counts asserting claims under Sections 11, 12(a)(2)
and 15 of the Securities Act and Sections 10(b) and 20(a) of the
Securities Exchange Act in which they alleged, among other things,
that the Company and Rubbermaid Incorporated made materially false and
misleading statements in documents filed with the SEC, including the
registration statement filed by the Company in connection with the
merger with Rubbermaid. All defendants moved to dismiss that amended
complaint. On October 2, 2000 the court issued a Memorandum Opinion
and Order dismissing the amended complaint for failure to state a
25
claim upon which relief may be granted and on October 3, 2000 the
court entered a judgment dismissing the complaint. Plaintiffs have
moved to reconsider two aspects of the court's ruling. The court is
scheduled to rule on that motion on November 15, 2000. The Company
believes that these claims are without merit and intends to continue
to vigorously defend these lawsuits.
Although management of the Company cannot predict the ultimate
outcome of these matters with certainty, it believes that their
ultimate resolution, including any amounts it may have to pay in
excess of amounts reserved, will not have a material effect on the
Company's consolidated financial statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.2 Amendment to By-Laws and Amended By-laws of Newell
Rubbermaid Inc., as amended through November 13, 2000.
12. Statement of Computation of Ratio of Earnings to Fixed
Charges
27. Financial Data Schedule
(b) Reports on Form 8-K:
None.
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
NEWELL RUBBERMAID INC.
Registrant
Date: November 14, 2000 /s/ Dale L. Matschullat
--------------------------------------
Dale L. Matschullat
Vice President - Finance
Date: November 14, 2000 /s/ Brett E. Gries
--------------------------------------
Brett E. Gries
Vice President - Accounting & Audit
EXHIBIT 3.2
-----------
AMENDMENT
TO
DELAWARE BY-LAWS
OF
NEWELL RUBBERMAID INC.
AMENDMENT NO. 13
(Article III, Section 3.2, as amended
by the Board of Directors on November 8, 2000)
Section 3.2 of the By-Laws has been amended to change the number
of directors of the Company from twelve to ten and now shall read as
follows:
ARTICLE III
DIRECTORS
---------
3.2 NUMBER, TENURE AND QUALIFICATION. The number of
directors of the Corporation shall be ten and the term of
office of each director shall be as set forth in the
Restated Certificate of Incorporation, as amended. A
director may resign at any time upon written notice to the
Corporation.
BY-LAWS
OF
NEWELL RUBBERMAID INC.
(a Delaware corporation)
(as amended November 8, 2000)
ARTICLE I
OFFICES
-------
1.1 REGISTERED OFFICE. The registered office of the
Corporation in the State of Delaware shall be located in the City of
Dover and County of Kent. The Corporation may have such other
offices, either within or without the State of Delaware, as the Board
of Directors may designate or the business of the Corporation may
require from time to time.
1.2 PRINCIPAL OFFICE IN ILLINOIS. The principal office of the
Corporation in the State of Illinois shall be located in the City of
Freeport and County of Stephenson.
ARTICLE II
STOCKHOLDERS
------------
2.1 ANNUAL MEETING. The annual meeting of stockholders shall
beheld each year at such time and date as the Board of Directors may
designate prior to the giving of notice of such meeting, but if no
such designation is made, then the annual meeting of stock holders
shall be held on the second Wednesday in May of each year for the
election of directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday, such meeting shall be held on the
next succeeding business day.
2.2 SPECIAL MEETINGS. Special meetings of the stockholders,
for any purpose or purposes, may be called by the Chairman, by the
Board of Directors or by the President.
2.3 PLACE OF MEETING. The Board of Directors may designate
anyplace, either within or without the State of Delaware, as the place
of meeting for any annual meeting or for any special meeting called by
the Board of Directors. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be the
principal office of the Corporation in the State of Illinois.
-2-
2.4 NOTICE OF MEETING. Written notice stating the place, date
and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given
not less than ten nor more than sixty days before the date of the
meeting, or in the case of a merger or consolidation of the
Corporation requiring stockholder approval or a sale, lease or
exchange of substantially all of the Corporation's property and
assets, not less than twenty nor more than sixty days before the date
of meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, notice shall be deemed given when deposited in
the United States mail, postage prepaid, directed to the stockholder
at his address as it appears on the records of the Corporation. When
a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless the
adjournment is for more than thirty days, or unless, after
adjournment, a new record date is fixed for the adjourned meeting, in
either of which cases notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the meeting.
2.5 FIXING OF RECORD DATE. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent (to the
extent permitted, if permitted) to corporate action in writing without
a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. If no record date is fixed, the
record date for determining stockholders entitled to notice of or to
vote at a meeting of stockholders shall be the close of business on
the day next preceding the day on which notice is given, or, if notice
is waived, at the close of business on the day next preceding the day
on which the meeting is held, and the record date for determining
stockholders for any other purpose shall be the close of business on
the day on which the Board of Directors adopts the resolution relating
thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting unless the Board of Directors fixes a new
record date for the adjourned meeting.
2.6 VOTING LISTS. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of
shares registered in his name, which list, for a period of ten days
prior to such meeting, shall be kept on file either at a place within
the city where the meeting is to be held and which place shall be
specified in the notice of the meeting, or, if not so specified, at
-3-
the place where the meeting is to be held, and shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, at any time during ordinary business hours. Such lists shall
also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are
the stockholders entitled to examine the stock ledger, the list of
stockholders entitled to vote, or the books of the Corporation, or to
vote in person or by proxy at any meeting of stockholders.
2.7 QUORUM. The holders of shares of stock of the Corporation
entitled to cast a majority of the total votes that all of the
outstanding shares of stock of the Corporation would be entitled to
cast at the meeting, represented in person or by proxy, shall
constitute a quorum at any meeting of stockholders; provided, that if
less than a majority of the outstanding shares of capital stock are
represented at said meeting, a majority of the shares of capital stock
so represented may adjourn the meeting. If a quorum is present, the
affirmative vote of a majority of the votes entitled to be cast by the
holders of shares of capital stock represented at the meeting shall be
the act of the stockholders, unless a different number of votes is
required by the General Corporation Law, the Certificate of
Incorporation or these By-Laws. At any adjourned meeting at which a
quorum shall be present, any business may be transacted which might
have been transacted at the original meeting. Withdrawal of
stockholders from any meeting shall not cause failure of a duly
constituted quorum at that meeting.
2.8 PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to
act for such stockholder by proxy, but no such proxy shall be voted or
acted upon after three years from its date, unless the proxy provides
for a longer period. Without limiting the manner in which a
stockholder may authorize another person or persons to act for such
stockholder as proxy pursuant to the foregoing sentence, a stockholder
may validly grant such authority (i) by executing a writing
authorizing another person or persons to act for such stockholder as
proxy or (ii) by authorizing another person or persons to act for such
stockholder as proxy by transmitting or authorizing the transmission
of a telegram, cablegram, or other means of electronic transmission to
the person who will be the holder of the proxy or to a proxy
solicitation firm, proxy support service organization or like agent
duly authorized by the person who will be the holder of the proxy to
receive such transmission, provided that any such telegram, cablegram
or other means of electronic transmission must either set forth or be
submitted with information from which it can be determined that the
telegram, cablegram or other electronic transmission was authorized by
the stockholder, or by any other means permitted under the Delaware
General Corporation Law.
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2.9 VOTING OF STOCK. Each stockholder shall be entitled to
such vote as shall be provided in the Certificate of Incorporation,
or, absent provision therein fixing or denying voting rights, shall be
entitled to one vote per share with respect to each matter submitted
to a vote of stockholders.
2.10 VOTING OF STOCK BY CERTAIN HOLDERS. Persons holding stock
in a fiduciary capacity shall be entitled to vote the shares so held.
Persons whose stock is pledged shall be entitled to vote, unless in
the transfer by the pledgor on the books of the Corporation he has
expressly empowered the pledgee to vote thereon, in which case only
the pledgee or his proxy may represent such stock and vote thereon.
Stock standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxy as the charter
or by-laws of such corporation may prescribe or, in the absence of
such provision, as the board of directors of such corporation may
determine. Shares of its own capital stock belonging to the
Corporation or to another corporation, if a majority of the shares
entitled to vote in the election of directors of such other
corporation is held by the Corporation, shall neither be entitled to
vote nor counted for quorum purposes, but shares of its capital stock
held by the Corporation in a fiduciary capacity may be voted by it and
counted for quorum purposes.
2.11 VOTING BY BALLOT. Voting on any question or in any
election may be by voice vote unless the presiding officer shall order
or any stockholder shall demand that voting be by ballot.
ARTICLE III
DIRECTORS
---------
3.1 GENERAL POWERS. The business of the Corporation shall be
managed by its Board of Directors.
3.2 NUMBER, TENURE AND QUALIFICATION. The number of directors
of the Corporation shall be ten, and the term of office of each
director shall be as set forth in the Restated Certificate of
Incorporation, as amended. A director may resign at any time upon
written notice to the Corporation. Directors need not be stockholders
of the Corporation.
3.3 REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this By-Law,
immediately after, and at the same place as, the annual meeting of
stockholders. The Board of Directors may provide, by resolution, the
time and place, either within or without the State of Delaware, for
the holding of additional regular meetings without other notice than
such resolution.
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3.4 SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the Chief Executive
Officer or any two directors. The person or persons authorized to
call special meetings of the Board of Directors may fix any place,
either within or without the State of Delaware, as the place for
holding any special meeting of the Board of Directors called by him or
them.
3.5 NOTICE. Notice of any special meeting of directors, unless
waived, shall be given, in accordance with Section 3.6 of the By-Laws,
in person, by mail, by telegram or cable, by telephone, or by any
other means that reasonably may be expected to provide similar notice.
Notice by mail and, except in emergency situations as described below,
notice by any other means, shall be given at least two (2) days before
the meeting. For purposes of dealing with an emergency situation, as
conclusively determined by the director(s) or officer(s) calling the
meeting, notice may be given in person, by telegram or cable, by
telephone, or by any other means that reasonably may be expected to
provide similar notice, not less than two hours prior to the meeting.
If the secretary shall fail or refuse to give such notice, then the
notice may be given by the officer(s) or director(s) calling the
meeting. Any meeting of the Board of Directors shall be a legal
meeting without any notice thereof having been given, if all the
directors shall be present at the meeting. The attendance of a
director at any meeting shall constitute a waiver of notice of such
meeting, and no notice of a meeting shall be required to be given to
any director who shall attend such meeting. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
3.6 NOTICE TO DIRECTORS. If notice to a director is given by
mail, such notice shall be deemed to have been given when deposited in
the United States mail, postage prepaid, addressed to the director at
his address as it appears on the records of the Corporation. If
notice to a director is given by telegram, cable or other means that
provide written notice, such notice shall be deemed to have been given
when delivered to any authorized transmission company, with charges
prepaid, addressed to the director at his address as it appears on the
records of the Corporation. If notice to a director is given by
telephone, wireless, or other means of voice transmission, such notice
shall be deemed to have been given when such notice has been
transmitted by telephone, wireless or such other means to such number
or call designation as may appear on the records of the Corporation
for such director.
3.7 QUORUM. Except as otherwise required by the General
Corporation Law or by the Certificate of Incorporation, a majority of
the number of directors fixed by these By-Laws shall constitute a
quorum for the transaction of business at any meeting of the Board of
Directors, provided that, if less than a majority of such number of
directors are present at said meeting, a majority of the directors
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present may adjourn the meeting from time to time without further
notice. Interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a
committee thereof.
3.8 MANNER OF ACTING. The vote of the majority of the
directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors.
3.9 ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all the members
of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
3.10 VACANCIES. Vacancies on the Board of Directors, newly
created directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of Directors
resulting from death, disability, resignation, retirement, disquali-
fication, removal from office or other cause shall be filled in
accordance with the provisions of the Certificate of Incorporation.
3.11 COMPENSATION. The Board of Directors, by the affirmative
vote of a majority of directors then in office, and irrespective of
any personal interest of any of its members, shall have authority to
establish reasonable compensation of all directors for services to the
Corporation as directors, officers, or otherwise. The directors maybe
paid their expenses, if any, of attendance at each meeting of the
Board and at each meeting of any committee of the Board of which they
are members in such manner as the Board of Directors may from time to
time determine.
3.12 PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors or at a meeting of
any committee of the Board at which action on any corporate matter is
taken shall be conclusively presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action
with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the Corporation within 24 hours after the
adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
3.13 COMMITTEES. By resolution passed by a majority of the
whole Board, the Board of Directors may designate one or more com-
mittees, each such committee to consist of two or more directors of
the Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member of any meeting of the committee. Any such
committee, to the extent provided in the resolution or in these
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By-Laws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. In the absence or
disqualification of any member of such committee or committees, the
member or members thereof present at the meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at
the meeting in the place of such absent or disqualified member.
3.14 CHAIRMAN AND VICE CHAIRMEN. The Board of Directors may
from time to time designate from among its members a Chairman of the
Board and one or more Vice Chairmen. The Chairman shall preside at
all meetings of the Board of Directors. In the absence of the
Chairman of the Board, the Chief Executive Officer and the President
and Chief Operating Officer, and, in their absence, a Vice Chairman
(with the longest tenure as Vice Chairman), shall preside at all
meetings of the Board of Directors. The Chairman and each of the Vice
Chairmen shall have such other responsibilities as may from time to
time be assigned to each of them by the Board of Directors.
ARTICLE IV
OFFICERS
--------
4.1 NUMBER. The officers of the Corporation shall be a Chief
Executive Officer, a President and Chief Operating Officer, one or
more Group Presidents (the number thereof to be determined by the
Board of Directors), one or more vice presidents (the number thereof
to be determined by the Board of Directors), a Treasurer, a Secretary
and such Assistant Treasurers, Assistant Secretaries or other officers
as may be elected by the Board of Directors.
4.2 ELECTION AND TERM OF OFFICE. The officers of the
Corporation shall be elected annually by the Board of Directors at the
first meeting of the Board of Directors held after each annual meeting
of stockholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. New offices may be created and filled at any
meeting of the Board of Directors. Each officer shall hold office
until his successor is elected and has qualified or until his earlier
resignation or removal. Any officer may resign at any time upon
written notice to the Corporation. Election of an officer shall not
of itself create contract rights, except as may otherwise be provided
by the General Corporation Law, the Certificate of Incorporation or
these By-Laws.
4.3 REMOVAL. Any officer elected by the Board of Directors
maybe removed by the Board of Directors whenever in its judgement the
best interests of the Corporation would be served thereby, but such
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removal shall be without prejudice to the contract rights, if any, of
the person so removed.
4.4 VACANCIES. A vacancy in any office occurring because of
death, resignation, removal or otherwise, may be filled by the Board
of Directors.
4.5 [INTENTIONALLY OMITTED.]
4.6 THE CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall be the principal executive officer of the Corporation. Subject
only to the Board of Directors, he shall be in charge of the business
of the Corporation; he shall see that the resolutions and directions
of the Board of Directors are carried into effect except in those
instances in which that responsibility is specifically assigned to
some other person by the Board of Directors; and, in general, he shall
discharge all duties incident to the office of the chief executive
officer of the Corporation and such other duties as may be prescribed
by the Board of Directors from time to time. In the absence of the
Chairman of the Board, the Chief Executive Officer shall preside at
all meetings of the Board of Directors. The Chief Executive Officer
shall have authority to vote or to refrain from voting any and all
shares of capital stock of any other corporation standing in the name
of the Corporation, by the execution of a written proxy, the execution
of a written ballot, the execution of a written consent or otherwise,
and, in respect to any meeting of the stockholders of such other
corporation, and, on behalf of the Corporation, may waive any notice
of the calling of any such meeting. The Chief Executive Officer or,
in his absence, the President and Chief Operating Officer, the Vice
President-Finance, the Vice President-Controller, the Treasurer or
such other person as the Board of Directors or one of the preceding
named officers shall designate, shall call any meeting of the
stockholders of the Corporation to order and shall act as chairman of
such meeting. In the event that no one of the Chief Executive
Officer, the President and Chief Operating Officer, the Vice
President-Finance, the Vice President-Controller, the Treasurer or a
person designated by the Board of Directors or by one of the preceding
named officers, is present, the meeting shall not be called to order
until such time as there shall be present the Chief Executive Officer,
the President and Chief Operating Officer, the Vice President-Finance,
the Vice President-Controller, the Treasurer or a person designated by
the Board of Directors or by one of the preceding named officers. The
chairman of any meeting of the stockholders of this Corporation shall
have plenary power to set the agenda, determine the procedure and
rules of order, and make definitive rulings at meetings of the
stockholders. The Secretary or an Assistant Secretary of the
Corporation shall act as secretary at all meetings of the stock-
holders, but in the absence of the Secretary or an Assistant
Secretary, the chairman of the meeting may appoint any person to act
as secretary of the meeting.
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4.7 THE PRESIDENT AND CHIEF OPERATING OFFICER. The President
and Chief Operating Officer shall be the principal operating officer
of the Corporation and, subject only to the Board of Directors and to
the Chief Executive Officer, he shall have the general authority over
and general management and control of the property, business and
affairs of the Corporation. In general, he shall discharge all duties
incident to the office of the principal operating officer of the
Corporation and such other duties as may be prescribed by the Board of
Directors and the Chief Executive Officer from time to time. In the
absence of the Chairman of the Board and the Chief Executive Officer,
the President and Chief Operating Officer shall preside at all
meetings of the Board of Directors. In the absence of the Chief
Executive Officer or in the event of his disability, or inability to
act, or to continue to act, the President and Chief Operating Officer
shall perform the duties of the Chief Executive Officer, and when so
acting, shall have all of the powers of and be subject to all of the
restrictions upon the office of Chief Executive Officer. Except in
those instances in which the authority to execute is expressly
delegated to another officer or agent of the Corporation or a
different mode of execution is expressly prescribed by the Board of
Directors or these By-Laws, he may execute for the Corporation
certificates for its shares (the issue of which shall have been
authorized by the Board of Directors), and any contracts, deeds,
mortgages, bonds, or other instruments that the Board of Directors has
authorized, and he may (without previous authorization by the Board of
Directors) execute such contracts and other instruments as the conduct
of the Corporation's business in its ordinary course requires, and he
may accomplish such execution in each case either individually or with
the Secretary, any Assistant Secretary, or any other officer there
unto authorized by the Board of Directors, according to the require-
ments of the form of the instrument. The President and Chief
Operating Officer shall have authority to vote or to refrain from
voting any and all shares of capital stock of any other corporation
standing in the name of the Corporation, by the execution of a written
proxy, the execution of a written ballot, the execution of a written
consent or otherwise, and, in respect of any meeting of stockholders
of such other corporation, and, on behalf of the Corporation, may
waive any notice of the calling of any such meeting.
4.8 THE GROUP PRESIDENTS. Each of the Group Presidents shall
have general authority over and general management and control of the
property, business and affairs of certain businesses of the corpora-
tion. Each of the Group Presidents shall report to the President and
Chief Operating Officer or such other officer as may be determined by
the Board of Directors or the President and Chief Operating Officer
and shall have such other duties and responsibilities as may be assigned
to him by the President and Chief Operating Officer and the Board of
Directors from time to time.
4.9 THE VICE PRESIDENTS. Each of the Vice Presidents shall
report to the President and Chief Operating Officer or such other
officer as may be determined by the Board of Directors or the
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President and Chief Operating Officer. Each Vice President shall have
such duties and responsibilities as from time to time may be assigned
to him by the President and Chief Operating Officer and the Board of
Directors.
4.10 THE TREASURER. The Treasurer shall: (i) have charge and
custody of and be responsible for all funds and securities of the
corporation; receive and give receipts for monies due and payable to
the Corporation from any source whatsoever, and deposit all such
monies in the name of the Corporation in such banks, trust companies
or other depositories as shall be selected in accordance with the
provisions of Article V of these By-Laws; (ii) in general, perform all
the duties incident to the office of Treasurer and such other duties
as from time to time may be assigned to him by the President and Chief
Operating Officer or the Board of Directors. In the absence of the
Treasurer, or in the event of his incapacity or refusal to act, or at
the direction of the Treasurer, any Assistant Treasurer may perform
the duties of the Treasurer.
4.11 THE SECRETARY. The Secretary shall: (i) record all of the
proceedings of the meetings of the stockholders and Board of Directors
in one or more books kept for the purpose; (ii) see that all notices
are duly given in accordance with the provisions of these By-Laws or
as required by law; (iii) be custodian of the corporate records and of
the seal of the Corporation and see that the seal of the Corporation
is affixed to all certificates for shares of capital stock prior to
the issue thereof and to all documents, the execution of which on
behalf of the Corporation under its seal is duly authorized in
accordance with he provisions of these By-Laws; (iv) keep a register
of the post office address of each stockholder which shall be
furnished to the Secretary by such stockholder; (v) have general
charge of the stock transfer books of the Corporation and (vi) in
general, perform all duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him by the
President and Chief Operating Officer or the Board of Directors. In
the absence of the Secretary, or in the event of his incapacity or
refusal to act, or at the direction of the Secretary, any Assistant
Secretary may perform the duties of Secretary.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
-------------------------------------
5.1 CONTRACTS. Except as otherwise determined by the Board of
Directors or provided in these By-Laws, all deeds and mortgages made
by the Corporation and all other written contracts and agreements to
which the Corporation shall be a party shall be executed in its name
by the Chief Executive Officer, the President and Chief Operating
Officer, or any Vice President so authorized by the Board of
Directors.
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5.2 LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its
name unless authorized by a resolution of the Board of Directors. Such
authority may be general or confined to specific instances.
5.3 CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation, shall be signed by such officer
or officers, agent or agents of the Corporation and in such manner as
shall from time to time be determined by resolution of the Board of
Directors.
5.4 DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as
the Board of Directors may select.
ARTICLE VI
CERTIFICATES FOR SHARES OF
CAPITAL STOCK AND THEIR TRANSFER
--------------------------------
6.1 SHARE OWNERSHIP; TRANSFERS OF STOCK. Shares of the capital
stock of the Corporation may be certificated or uncertificated.
Owners of shares of the capital stock of the Corporation shall be
recorded in the books of the Corporation and ownership of such shares
shall be evidenced by a certificate or book entry notation in the
books of the Corporation. If shares are represented by certificates,
such certificates shall be in such form as may be determined by the
Board of Directors. Certificates shall be signed by the Chief
Executive Officer or the President and Chief Operating Officer or any
Vice President and by the Treasurer or the Secretary or an Assistant
Secretary. If any such certificate is countersigned by a transfer
agent other than the Corporation or its employee, or by a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent
or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue. All
certificates for shares of capital stock shall be consecutively
numbered or otherwise identified. The name of the person to whom the
shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the Corporation. Each
certificate surrendered to the Corporation for transfer shall be
cancelled and no new certificate or other evidence of new shares
shall be issued until the former certificate for alike number of
shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate, a new certificate or
other evidence of new shares may be issued therefor upon such terms
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and indemnity to the Corporation as the Board of Directors may pre-
scribe. Uncertificated shares shall be transferred in the books of
the Corporation upon the written instruction originated by the
appropriate person to transfer the shares.
6.2 TRANSFER AGENTS AND REGISTERS. The Board of Directors may
appoint one or more transfer agents or assistant transfer agents and
one or more registrars of transfers, and may require all certificates
for shares of capital stock of the Corporation to bear the signature
of a transfer agent and a registrar of transfers. The Board of
Directors may at any time terminate the appointment of any transfer
agent or any assistant transfer agent or any registrar of transfers.
ARTICLE VII
LIABILITY AND INDEMNIFICATION
-----------------------------
7.1 LIMITED LIABILITY OF DIRECTORS.
(a) No person who was or is a director of this Corporation
shall be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except
for liability (i) for breach of the duty of loyalty to the Corporation
or its stockholders; (ii) for acts of omissions not in good faith or
that involve intentional misconduct or known violation of law; (iii)
under Section 174 of the General Corporation Law; or (iv) for any
transaction from which the director derived any improper personal
benefit. If the General Corporation Law is amended after the
effective date of the By-Law to further eliminate or limit, or to the
effective date of this By-Law to further eliminate or limit, or to
authorize further elimination or limitation of, the personal liability
of a director to this Corporation or its stockholders shall be
eliminated or limited to the full extent permitted by the General
Corporation Law, as so amended. For purposes of this By-Law,
"fiduciary duty as a director" shall include any fiduciary duty
arising out of serving at the request of this Corporation as a
director of another corporation, partnership, joint venture, trust or
other enterprise, and any liability to such other corporation,
partnership, joint venture, trust or other enterprise, and any
liability to this Corporation in its capacity as a security holder,
joint venturer, partner, beneficiary, creditor, or investor of or in
any such other corporation, partnership, joint venture, trust or other
enterprise.
(b) Any repeal or modification of the foregoing paragraph by
the stockholders of this Corporation shall not adversely affect the
elimination or limitation of the personal liability of a director for
any act or omission occurring prior to the effective date of such
repeal or modification. This provision shall not eliminate or limit
the liability of a director for any act or omission occurring prior to
the effective date of this By-Law.
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7.2 LITIGATION BROUGHT BY THIRD PARTIES. The Corporation shall
indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason
of the fact that he is or was or has agreed to become a director or
officer of the Corporation; or is or was serving or has agreed to serve
at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action alleged to have been taken or omitted in such
capacity, against costs, charges and other expenses (including attorneys'
fees) ("Expenses"), judgements, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding and any appeal thereof if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgement, order, settlement, conviction, or plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful. For purposes of this By-Law,
"serving or has agreed to serve at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture,
trust or other enterprise" shall include any service by a director or
officer of the Corporation as a director, officer, employee, agent or
fiduciary of such other corporation, partnership, joint venture trust
or other enterprise, or with respect to any employee benefit plan (or
its participants or beneficiaries) of the Corporation or any such
other enterprise.
7.3 LITIGATION BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was or has
agreed to become a director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation
as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged
to have been taken or omitted in such capacity against Expenses
actually and reasonably incurred by him in connection with the
investigation, defense or settlement of such action or suit and any
appeal thereof if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to
the extent that the Court of Chancery of Delaware or the court in
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which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such Expenses as the Court of Chancery of
Delaware or such other court shall deem proper.
7.4 SUCCESSFUL DEFENSE. To the extent that any person referred
to in section 7.2 or 7.3 of these By-Laws has been successful on the
merits or otherwise, including, without limitation, the dismissal of
an action without prejudice, in defense of any action, suit or
proceeding referred to therein or in defense of any claim, issue or
matter therein, he shall be indemnified against Expenses actually and
reasonably incurred by him in connection therewith.
7.5 DETERMINATION OF CONDUCT. Any indemnification under
section 7.2 or 7.3 of these By-Laws (unless ordered by a court) shall
be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director or officer
is proper in the circumstances because he has met the applicable
standard of conduct set forth in section 7.2 or 7.3. Such determina-
tion shall be made (i) by the Board of Directors by a majority vote of
a quorum (as defined in these By-laws) consisting of directors who were
not parties to such action, suit or proceeding, or (ii) if such quorum
is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion,
or (iii) by the stockholders.
7.6 ADVANCE PAYMENT. Expenses incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding
and any appeal upon receipt by the Corporation of an undertaking by or
on behalf of the director or officer to repay such amount if it shall
ultimately be determined that the is not entitled to be indemnified by
the Corporation.
7.7 DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. The
determination of the entitlement of any person to indemnification
under section 7.2, 7.3 or 7.4 or to advancement of Expenses under
section 7.6 of these By-Laws shall be made promptly, and in any event
within 60 days after the Corporation has received a written request
for payment from or on behalf of a director or officer and payment of
amounts due under such sections shall be made immediately after such
determination. If no disposition of such request is made within said
60 days or if payment has not been made within 10 days thereafter, or
if such request is rejected, the right to indemnification or
advancement of Expenses provided by this By-Law shall be enforceable
by or on behalf of the director or officer in any court of competent
jurisdiction. In addition to the other amounts due under this By-Law,
Expenses incurred by or on behalf of a director or officer in
successfully establishing his right to indemnification or advancement
of Expenses, in whole or in part, in any such action (or settlement
thereof) shall be paid by the Corporation.
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7.8 BY-LAWS NOT EXCLUSIVE: CHANGE IN LAW. The indemnification
and advancement of Expenses provided by these By-Laws shall not be
deemed exclusive of any other rights to which those seeking indemni-
fication or advancement of Expenses may be entitled under any law
(common or statutory), the Certificate of Incorporation, agreement,
vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office, or while employed by or acting as a director
or officer of the Corporation or as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, and
shall continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of the heirs, executors and administrators
of such a person. Notwithstanding the provisions of these By-Laws, the
Corporation shall indemnify or make advancement of Expenses to any person
referred to in section 7.2 or 7.3 of this By-Law to the full extent
permitted under the laws of Delaware and any other applicable laws, as
they now exist or as they may be amended in the future.
7.9 CONTRACT RIGHTS. All rights to indemnification and
advancement of Expenses provided by these By-Laws shall be deemed to
be a contract between the Corporation and each director or officer of
the Corporation who serves, served or has agreed to serve in such
capacity, or at the request of the Corporation as director or officer
of another corporation, partnership, joint venture, trust or other
enterprise, at any time while these By-Laws and the relevant
provisions of the General Corporation Law or other applicable law, if
any, are in effect. Any repeal or modification of these By-Laws, or
any repeal or modification of relevant provisions of the Delaware
General Corporation Law or any other applicable law, shall not in
anyway diminish any rights to indemnification of or advancement of
Expenses to such director or officer or the obligations of the
Corporation.
7.10 INSURANCE. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was or has to
become a director or officer of the Corporation, or is or was serving
or has agreed to serve at the request of the Corporation as a director
or officer of another corporation, partnership, joint venture, trust
or other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of these By-Laws.
7.11 INDEMNIFICATION OF EMPLOYEES OR AGENTS. The Board of
Directors may, by resolution, extend the provisions of these By-Laws
pertaining to indemnification and advancement of Expenses to any
person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding by
reason of the fact that he is or was or has agreed to become an
employee, agent or fiduciary of the Corporation or is or was serving
or has agreed to serve at the request of the Corporation as a
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director, officer, employee, agent or fiduciary of another Corporation,
partnership, joint venture, trust or other enterprise or with respect
to any employee benefit plan (or its participants or beneficiaries) of
the Corporation or any such other enterprise.
ARTICLE VIII
FISCAL YEAR
-----------
8.1 The fiscal year of the Corporation shall end on the
thirty-first day of December in each year.
ARTICLE IX
DIVIDENDS
---------
9.1 The Board of Directors may from time to time declare, and
the Corporation may pay, dividends on its outstanding shares of
capital stock in the manner and upon the terms and conditions provided
by law and its Certificate of Incorporation.
ARTICLE X
SEAL
----
10.1 The Board of Directors shall provide a corporate seal which
shall be in the form of a circle and shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal, Delaware."
ARTICLE XI
WAIVER OF NOTICE
----------------
11.1 Whenever any notice whatever is required to be given under
any provision of these By-Laws or of the Certificate of Incorporation
or of the General Corporation Law, a written waiver thereof, signed by
the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person
at a meeting of stockholders shall constitute a waiver of notice of
such meeting, except when the stockholder attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
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ARTICLE XII
AMENDMENTS
----------
12.1 These By-Laws may be altered, amended or repealed and new
By-Laws may be adopted at any meeting of the Board of Directors of the
Corporation by a majority of the whole Board of Directors.
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EXHIBIT 12
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NEWELL RUBBERMAID INC. AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(in thousands, except ratio data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
(In thousands, except ratio data)
Earnings available to fixed charges:
Income before income taxes $199,999 $119,241 $532,088 $113,489
Fixed charges:
Interest expense 33,184 26,012 95,021 75,713
Portion of rent determined
to be interest (1) 8,651 10,243 25,212 24,239
Minority interest in
income of subsidiary trust 6,677 6,686 20,040 20,082
Eliminate equity in earnings
of unconsolidated entities (1,936) (2,410) (6,813) (6,466)
-------- -------- -------- --------
$246,575 $159,772 $665,548 $227,057
======== ======== ======== ========
Fixed charges:
Interest expense $33,184 $26,012 $95,021 $75,713
Portion of rent determined to
be interest (1) 8,651 10,243 25,212 24,239
Minority interest in income of
subsidiary trust 6,677 6,686 20,040 20,082
------- ------- -------- --------
$48,512 $42,941 $140,273 $120,034
======= ======= ======== ========
Ratio of earnings to fixed charges 5.08 3.72 4.74 1.89
======= ======= ======== ========
(1) A standard ratio of 33% was applied to gross rent expense to
approximate the interest portion of short-term and long-term
leases.
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